You can deduct the cost of these services as business expenses. This includes the cost of hiring an accountant or accountant to help you calculate income tax, as well as the cost of legal services related to your business. Consultants are likely to have deductible business expenses that can help you save a lot on your taxes. A checklist can help you account for each deduction you're entitled to.
These are the main tax deductions for consultants. Don't let those amortizations go unnoticed. Familiarize yourself with the usual tax deductions for consultants and keep track of those expenses so you can take advantage of all the year-end tax exemptions. Business meals cannot be luxurious and the deduction is usually limited to 50% of the cost of the meal.
Be sure to keep a record that documents the commercial purpose of the food. You may have several types of business insurance, such as general liability, professional liability, and property insurance for your computer and other company assets. You can deduct the premiums you pay for this coverage. You can also deduct self-employed health insurance premiums if you pay for your medical, dental, vision, and long-term care insurance.
You can usually deduct the cost of your desktop or laptop computer, the printer, and the software you use to run your consulting business. To amortize the full cost of computer equipment or software, you should use it more than 50% of the time to do business. If the equipment is mainly for personal use, you can't deduct it. Office supplies, such as pens and paper, stamps, ink cartridges, calendars, tapes, file folders, and cleaning supplies, are all deductible business expenses.
The above list is not an exhaustive list of deductible expenses. For more information about what payments are deductible and the rules for deducting them, see IRS Publication 535, Business Expenses, and Publication 463, Travel, Gifts, and Auto Expenses. Are you a small business owner? You can benefit from using these 10 deductions to reduce your taxable income. Key deductions include those for home office expenses, health insurance premiums and start-up costs.
The self-employed health insurance deduction can help offset some of the costs of paying out of pocket for health care coverage. Find out who can apply for the deduction, what it includes, and how to apply for it. Consultants can deduct the costs of operating a home office or rented office space. If they have a room that serves strictly as an office, they can deduct a commensurate amount from household expenses, such as utilities, insurance, mortgage interest, and repairs.
The cost of office furniture and equipment can be deducted from taxes through depreciation, which means that a portion of the cost is deducted over several years. Smaller items, such as paper, files, and other office supplies, can be deducted. Internet costs and phone bills are also deductible. If you choose to use actual expenses, you can deduct gas, insurance, repair and depreciation expenses.
You'll need to keep an excellent record to support your travel and car expenses. In particular, keep a mileage log so you can accurately calculate the percentage of the total mileage you use for your business. Also, keep the receipts for all your actual expenses. Your consulting practice is likely to involve dozens of in-person meetings with company managers and executives.
Many of these meetings may include meals and entertainment. Independent business consultants who provide advice may have several types of business insurance, including professional liability insurance (PLI) coverage. The PLI, or errors and omissions insurance, covers legal costs in the event that the policyholder is sued for negligence. These services can help you manage your consulting business more efficiently and effectively, allowing you to focus on your customers and grow your business.
As a consultant, you probably rely on several different professional services, from legal and accounting services to marketing and web design...